BVS2008: Scope

One of the most important elements of building a sound business strategy is selecting the right markets to participate in. Scope, venture’s chosen level of involvement in a value network, is essentially specified by two variables – time and space. To avoid wasting resources the entry has to be timed right and made to a market with demand and minimum competition. High-definition video service market is a highly volatile business and thus taking only calculated risks is essential to any venture in the field.

In high-tech service industries building a competitive offering is a very high stakes game. On the one hand investing in a full vertical solution can be very capital intensive. On the other hand too small service offering may not satisfy the demands of the customers and leads to disaster. To make matters more complicated it just may be impossible, even with unlimited resources, to build a solution in a given time frame. Adding into the mix the flammable qualities of content industry it becomes clear we are baking a one explosive venture.

At times it is wise to just acknowledge facts of life. Content is notorious for being highly time-sensitive commodity with easily missed expiration date. Trying to control the content business would be like building a ticking time bomb. It may be a good idea to just try to find ground a company can protect. For a service company good relations with the content industry are imperative, but it would be a very wise move to keep them out of company’s scope. Limiting company’s involvement can be achieved by finding content aggregator partners willing to share some of the risk.

Often big players try to overpower a game by joining several previously disconnected value chains. In general if the bundled services can not be considered commodities there will be trouble. Bundling does not make sense also if demand or price for one of the components is low. Bundling digital video content services with broadband connections and telephone services is called triple-play. Since HD video services are not a commodity, ARPU for broadband and telephone services is not high enough, so bundling is probably not a wise strategy for HD services yet.

Grabbing the low hanging fruits can be lucrative, but low barriers to entry also attracts other players. Minimizing direct competition during a chosen time window is essential for succesful entry. Direct competition can be downgraded by linking the game with other games. Bringing in an innovative approach combining disparate industries instead of joining obvious combinations would be wise. While copying may not be easy finding winning combinations in the first place is no easy task.

Exploring emerging technologies requires different strategies than working in a static business environment. Consequently also high definition video services company’s strategy needs to change as the technology matures. Early on it will be important to partner with parties that can bring in distribution solutions. Later on as standards become more dominent it would be important to get out of contracts with telecoms business and start direct involvement with hardware players. Another option that could work is starting a partnership directly with hardware manufacturer. Whichever the choice content selection and customer service should at the core of the business venture’s scope.


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